ULTA SALON, COSMETICS & FRAGRANCE, INC. RESTRICTED STOCK AGREEMENT — VESTING (ROBERT DIROMUALDO)
EXHIBIT 10.5
THIS RESTRICTED AGREEMENT (“Agreement”), made as of June ___, 2004 (the “Date of Issuance”), is
by and between Ulta Salon, Cosmetics & Fragrance, Inc. (the “Company”) and Xxxxxx XxXxxxxxxx
(“Director”).
The Company desires to grant to the Director $.01 par value common shares of the Company
(“Common Stock”), pursuant to the terms of the Second Amendment and Restatement of Ulta Salon,
Cosmetics & Fragrance Inc. Restricted Stock Plan (the “Plan”).
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used herein that are not otherwise defined shall
have the meanings assigned to them in the Plan.
2. GRANT OF STOCK. As of the date hereof Company hereby grants to Director 200,000
shares of Common Stock (the “Restricted Stock”), subject to the terms and conditions of this
Agreement.
3. VESTING. Except as otherwise provided hereunder or pursuant to the terms of the
Plan, shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered from the Date of Issuance until the Director becomes vested in the shares of Restricted
Stock (and restrictions thereon terminate) (the “Vested Shares”) in accordance with the following
schedule:
| Cumulative Percentage of | ||||
| Shares of Restricted Stock | ||||
| Date | Which are Vested Shares | |||
the Date of Issuance |
0 | % | ||
February 26, 2005 – February 25, 2006 |
25 | % | ||
February 26, 2006 – February 25, 2007 |
50 | % | ||
February 26, 2007 – February 25, 2008 |
75 | % | ||
February 26, 2008 |
100 | % | ||
Upon a Sale of the Company all shares of Restricted Stock shall become Vested Shares.
Additionally, if the Director ceases to be a member of the Board of Directors of the Company by
reason of death or Disability (as defined below) any time after the Company’s annual meeting of
stockholders (the “Annual Meeting”) occurring in 2005, then all shares of Restricted Stock shall
become Vested Shares. Otherwise, if Director ceases to be a member of the Board of Directors of
the Company for any reason, he shall forfeit any unvested shares of Restricted Stock and such
shares shall be returned to the Company. For purposes of this Agreement, the term
“Disability” shall mean the mental or physical incapacity of the Director such that Director would
be eligible to receive disability benefits under the Company’s long-term disability plan assuming
for this purpose that Director is eligible for participation in such plan and that Directors
occupation consist of his duties as a member of the Board of Directors prior to such incapacity.
4. RESTRICTIONS ON COMMON STOCK. Director acknowledges and agrees that the Restricted
Stock is subject to various restrictions set forth in the Plan. Director agrees as a holder of
Restricted Stock to be bound by all terms, conditions and restrictions contained in the Plan.
Director acknowledges that he has received a copy of the Plan.
5. REPURCHASE RIGHTS.
(a) In the event the Director (i) is removed as a director of the Company pursuant to Delaware
law, (ii) is slated for election or re-election to the Board of Directors of the Company and
refuses to serve, or (iii) resigns as a director of the Company then, the Vested Shares shall be
subject to repurchase by the Company at their then Fair Market Value (and unvested shares of
Restricted Stock shall be forfeited and returned to the Company) pursuant to the terms and
conditions contained in Section 3 of the Plan.
(b) In the event the Director is not slated for re-election to the Board of Directors of the
Company, then upon his termination as a director, the Company shall waive its repurchase option
under Section 3 of the Plan with respect to the Vested Shares and the unvested Shares of Restricted
Stock shall be forfeited and returned to the Company. Notwithstanding the foregoing, the Investors
(as defined in the Plan) shall retain their repurchase option under Section 3 of the Plan for any
Vested Shares.
(c) The Company shall waive its repurchase option under Section 3 of the Plan in the event the
Director ceases to be a member of the Board of Directors of the Company by reason of death or
Disability as follows: (i) if the Director’s service as a director ceases prior to the 2006 Annual
Meeting, the Company will waive its repurchase option as to 25% of the Vested Shares, (ii) if the
Director’s service ceases on or after the 2006 Annual Meeting, but prior to the 2007 Annual
Meeting, the Company shall waive its repurchase option as to 50% of the Vested Shares, (iii) if the
Director’s service ceases on or after the 2007 Annual Meeting, but prior to the 2008 Annual
Meeting, the Company shall waive its repurchase option as to 75% of the Vested Shares, and (iv) if
the Director’s service ceases on or after the 2008 Annual Meeting, the Company shall waive its
repurchase option as to 100% of the Vested Shares. Notwithstanding the foregoing, the Investors
shall retain their repurchase option under the terms and conditions of Section 3 of the Plan.
6. NO ASSURANCES OF SERVICES. Nothing in this Agreement confers any right on the
Director to continue as a director of the Company, or shall affect in any way the stockholders of
the Company’s right to terminate the Director as a director at any time.
7. SUBJECT TO COVENANTS. Director hereby agrees that the Restricted Stock issued
hereunder is subject to and conditioned upon Director’s execution and full compliance with the
terms of the Agreement Regarding Non Competition, Non Solicitation and Confidential
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Information (the “Non-Compete Agreement”) as set forth on Exhibit A hereto. If
Director breaches any term of the Non-Compete Agreement he shall forfeit all rights to future
vesting in any unvested shares of Restricted Stock.
8. SECURITIES LAWS. Director represents and warrants to the Company that she is
acquiring the Restricted Stock for her own account for investment purposes only and that she has no
agreement, understanding, arrangement or intent to subdivide, sell assign or transfer any portion
of or interest in the Restricted Stock to any other person.
9. AMENDMENTS. Any amendment, alteration, suspension, discontinuation, cancellation
or termination of the provisions of this Agreement that would impair the rights of the Director or
any beneficiary of the Director shall not be effective without the consent of the Director or the
beneficiary of the Director, as the case may be.
10. MISCELLANEOUS.
(a) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
(b) Successors and Assigns. Except as otherwise provided herein, this Agreement shall
bind and inure to the benefit of and be enforceable by Director, the Company, the Investors and
their respective successors and assigns (including subsequent holders of Director Stock); provided
that the rights and obligations of Director under this Agreement shall not be assignable except as
permitted in connection with a permitted transfer of Restricted Stock under the Plan.
(c) Choice of Law. The corporate law of the State of Delaware will govern all
questions concerning the relative rights of the Company and the holders of Common Stock. All other
questions concerning the construction, validity and interpretation of this Agreement will be
governed by the internal law, and not the law of conflicts, of the State of Delaware.
(d) Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until the Director is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:
Ulta Salon, Cosmetics & Fragrance, Inc.
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Unless and until the Company is notified in writing to the contrary, all notices,
communications and documents intended for the Director and related to this Agreement, if not
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delivered by hand, shall be delivered by registered first-class mail, telex, telecopier, or
air courier guaranteeing overnight delivery to Director’s last known address as shown on the
Company’s books. All mailings and deliveries related to this Agreement shall be deemed received
only when actually received.
IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as of the Date
of Issuance.
ULTA SALON, COSMETICS & FRAGRANCE INC.
By: /s/ Xxx Xxxxx
Its: Chief Executive Officer
Its: Chief Executive Officer
DIRECTOR
/s/ Xxxxxx XxXxxxxxxx
Xxxxxx XxXxxxxxxx
Xxxxxx XxXxxxxxxx
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EXHIBIT A
AGREEMENT REGARDING
NONCOMPETITION, NONSOLICITATION
AND CONFIDENTIAL INFORMATION
NONCOMPETITION, NONSOLICITATION
AND CONFIDENTIAL INFORMATION
RECITALS
WHEREAS Ulta Salon, Cosmetics & Fragrance, Inc. (“Ulta”) is a Delaware corporation engaged,
inter alia, in the business of providing hairdressing, beauty salon and other spa services and
selling perfume, fragrances, cosmetics, salon products, beauty aids and related goods and services
at retail and acting as a distributor of such goods throughout North America, including the sales
of such goods by means of the Internet;
WHEREAS Ulta has proprietary and confidential information which it wishes to safeguard and
keep confidential;
WHEREAS Ulta has strong relationships with its customer base, and is using the Ulta Beauty
Club and other marketing efforts to develop regular and near permanent relationships with certain
of its customers, all of which has been and is being accomplished through the expenditure of
extensive time, effort and resources and which it wishes to maintain;
WHEREAS, Ulta has hired, trained and developed an unusual and extraordinary workforce through
the expenditure of extensive time, effort and resources and which it wishes to retain;
WHEREAS, in my position as a consultant to Ulta and as a director of Ulta, if elected, I will
be in a position to receive proprietary and confidential information regarding Ulta if disclosed or
used by me in any way would be harmful to the economic interests of Ulta.
AGREEMENT
THEREFORE, in consideration of my service as a consultant and as a director of Ulta, if
elected, and for other good and valuable consideration, the sufficiency of which is hereby
acknowledged, I hereby agree to abide by the terms and conditions of this Agreement Regarding
Noncompetition, Nonsolicitation and Confidential Information.
I HAVE READ THE FOLLOWING AGREEMENT AND HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF
MY CHOICE (AT MY EXPENSE) PRIOR TO THE SIGNING OF THIS AGREEMENT. I UNDERSTAND THAT MY SIGNING
THIS AGREEMENT IS A CONDITION OF MY CONSULTING AGREEMENT AND MY ELECTION AS A DIRECTOR OF ULTA.
| Xxxxxx XxXxxxxxxx |
1. Noncompetition With Ulta. I understand and agree that I may receive valuable Confidential
Information of Ulta and exposure to key suppliers and regular and near permanent customers of Ulta,
including the membership and operations of the Ulta Beauty Club and similar programs and Ulta’s
plans and procedures for conducting its business on the World Wide Web/Internet (“Internet”). I,
therefore, agree that, during my Noncompete Period, I will not, directly or indirectly, own (in
whole or in part), organize, consult with, be employed by, advise, be a partner of or joint
venturer with, be a director or managing member of, or otherwise assist any Competitor within my
applicable Restricted Area.
2. Ownership of Equity in Competitors. I understand and agree that I will receive valuable
Confidential Information of Ulta and may obtain exposure to key suppliers and regular and near
permanent customers of Ulta, including the membership and operations of the Ulta Beauty Club and
similar programs. I, therefore, agree that, during my Noncompete Period, I will not, directly or
indirectly, purchase any equity securities of any corporation (other than as a shareholder or
beneficial owner directly or indirectly owning five percent (5%) or less of the outstanding
securities of a public company, publicly traded partnership or mutual fund) which is a Competitor.
3. Nonsolicitation of Employees. I understand and agree that Ulta has expended and will
continue to expend enormous time, effort and resources in the hiring, training and development of
an unusual and extraordinary workforce whose identity and ability I would not learn but for my
status as a consultant or director of Ulta. Therefore, I agree that, during my Nonsolicitation
Period, I will not, without Ulta’s consent directly or indirectly, (a) hire, employ, retain or
solicit, or attempt to hire, employ, retain or solicit, any employee of Ulta to work for, contract
with, become a partner with or otherwise be retained by any person, company (except Ulta), firm,
organization or other entity engaged in any business in which Ulta is engaged; (b) assist or advise
any person, company (except Ulta), firm, organization or other entity in such hiring, employing,
retaining, soliciting, or attempting to hire, employ, retain or solicit employees of Ulta; or (c)
encourage any employee to be hired, employed, retained or solicited by any person, company (except
Ulta), firm, organization or other entity. This paragraph shall not apply to the solicitation and
hiring of employees of Ulta who perform strictly clerical duties for Ulta.
4. Nonsolicitation of Customers. I understand and agree that I will receive valuable
Confidential Information of Ulta and may obtain exposure to key suppliers and regular and near
permanent customers of Ulta, including the membership and operations of the Ulta Beauty Club and
similar programs. I, therefore, agree that, for my Nonsolicitation Period, I will not, directly or
indirectly, call upon, solicit or otherwise contact any customers, or potential customers, of Ulta
with whom I had contact during my term as a director of Ulta.
5. Nonsolicitation of Suppliers. I understand and agree that I will receive valuable
Confidential Information of Ulta with respect to its relationships with suppliers of Ulta and that
such relationships and the right to purchase and distribute products from many such suppliers are
limited by such suppliers and constitute a valuable asset of Ulta. I, therefore, agree that, for
my Nonsolicitation Period, I will not, directly or indirectly, call upon, solicit or otherwise
contact any suppliers of Ulta with whom I had contact during my term as a consultant or director of
Ulta for purposes of introducing such supplier to a Competitor of Ulta or for purposes of inducing
or
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encouraging any such supplier to sell any such product line to any other retailer that seeks
to become a Competitor.
6. Confidentiality of Information. I understand that during my term as a consultant or
director of Ulta I will be exposed to Ulta’s Confidential Information. I agree to keep such
information strictly confidential. Except as required by virtue of a subpoena or other court order
which has also been served on Ulta, I agree not to disclose any Confidential Information to any
person, company, firm, organization or other entity nor to make use, nor to allow any other person,
company (except Ulta), firm, organization or other entity to make use, of Confidential Information.
7. Return of Documents and Electronic Media. At the termination of my relationship as either
a consultant or director with Ulta, I agree to promptly return to Ulta any and all confidential and
proprietary documents and other tangible Confidential Information and data, regardless of the form
in which it is recorded, as well as any and all copies and reproductions of such documents or other
tangible Confidential Information and data (regardless of the form of such copies or
reproductions), which I (i) received or obtained from or on behalf of Ulta or (ii) prepared,
compiled or collected during the course of my directorship with Ulta. I specifically agree not to
retain any copies of any Confidential Information. I further agree that upon Ulta’s request, I
will execute a sworn statement certifying that I have complied with this paragraph.
8. Definitions.
(a) A “Competitor,” as used herein, shall mean any person, company (except Ulta),
firm, organization or other entity which is substantially similar to the business in which Ulta is
engaged during my term as a consultant or director with Ulta. A business shall be deemed to be
substantially similar to that of Ulta if it has a business strategy and product mix (including,
without limitation, Sephora) which is similar to that of Ulta at the time in question or if it has
the intent to develop such a business.
(b) “Confidential Information,” as used herein, shall mean any and all confidential
and proprietary documents, information or other data (whether recorded or otherwise) not publicly
known or available and otherwise not know in the retail or wholesale hair styling, beauty salon,
spa services, fragrance, cosmetics, salon products or beauty aid/products industries or trades
concerning Ulta and its businesses, customers, potential customers, suppliers, marketing plans,
advertising, contracts, potential contracts, strategies, forecasts, pricing, methods, practices,
techniques, business plans, financial plans, research, development, manufacturing, purchasing,
accounting, engineering, know-how, technical data, processes and product development and/or any
other trade secrets of Ulta.
(c) My “Noncompete Period” shall be a period beginning at the time I was first elected
as a director of Ulta and ending two years following the termination of my relationship as either a
consultant to or as a director of Ulta, whichever is later.
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(d) My “Nonsolicitation Period” shall be a period beginning at the time I first serve
as a consultant for Ulta and ending two years following the termination of my relationship as
either a consultant to or as a director of Ulta, whichever is later.
(e) My “Restricted Area” shall be on the Internet an within the United States, Canada
or Mexico.
9. Injunctive Relief. I understand and agree that any violation of this Agreement will cause
immediate and irreparable harm to Ulta, the exact extent of which will be difficult to ascertain,
and that the remedies at law for any such violation could not adequately compensate Ulta.
Therefore, I agree that Ulta shall be entitled to specific performance and/or immediate,
preliminary and permanent injunctive relief for any violations of this Agreement. Ulta shall be
entitled to such relief without the necessity of proving actual damages. I waive any necessity for
the posting of a bond.
10. Choice of Law; Jurisdiction; Venue; Other Enforcement Issues. This Agreement shall be
governed by the laws of the State of Illinois. Ulta and I, both, irrevocably consent to the
jurisdiction of the United States District Court for the Northern District of Illinois and to the
Illinois Circuit Court of Xxxx County to adjudicate any disputes arising out of this Agreement.
Ulta and I, both, further agree that, to the extent permitted by law, venue for all disputes
arising under or related to this Agreement shall be in Chicago, Illinois. By entering into this
Agreement, Ulta expressly does not release, compromise or waive any rights, remedies, claims or
causes of action it may have against me for violation of any law, including without limitation the
Illinois Trade Secrets Act, 765 ILCS 1065 et seq. or similar laws that may be applicable in other
states.
11. Breach of Covenants. I acknowledge and agree that any breach by me of any of the
covenants or agreements contained herein during the period of my directorship shall be grounds for
immediate forfeiture of such directorship and forfeiture of any accrued and unpaid fees or other
compensation and any stock options, as liquidated damages. I acknowledge that any such liquidated
damages shall be in addition to, and not exclusive of, any and all other rights and remedies Ulta
may exercise against me. In the event Ulta is required to enforce any of its rights hereunder, I
shall be obligated to reimburse Ulta for all reasonable costs and expenses, including reasonable
attorney’s fees, incurred by Ulta in connection with the enforcement of its rights hereunder.
12. Nonassignment. I shall not assign, sell, transfer, delegate or otherwise dispose of any
rights or obligations under this Agreement.
13. Voluntary Agreement. I expressly acknowledge that I have voluntarily executed this
Agreement and that I have had the opportunity to be represented and advised by counsel concerning
the terms and conditions of this Agreement as well as my execution thereof.
14. Entire Agreement; Waivers; Modification. This Agreement is intended by the parties to be
the complete, exclusive and final expression of Ulta’s and my agreement with respect to
non-compete, non-solicitation and confidentiality provisions set forth above and supersedes, and
may not be contradicted by, or modified or supplemented by, evidence of any
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prior or contemporaneous agreement as to such matters, and no extrinsic evidence whatsoever
may be introduced to vary the terms of this Agreement. No waiver of any of the provisions of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or
construed as a further, continuing or subsequent waiver of any such provision or as a waiver of any
other provision of this Agreement. No failure to exercise and no delay in exercising any right,
remedy or power hereunder shall preclude any other or further exercise of any other right, remedy
or power provided herein or by law or in equity. Ulta and I expressly agree that (i) this
Agreement shall survive any termination or cessation of my term as a director of Ulta, whether the
same be initiated or caused by either me or Ulta and regardless of the reason or merits for such
termination or cessation and (ii) this Agreement may not be altered, amended, changed, terminated
or modified in any respect except by a written instrument clearly expressing the intent to so
modify this Agreement signed by me and an officer or director of Ulta.
15. Blue Pencil; Severability. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to exceed the limitations permitted by
applicable law, as determined by such court in such action, then the provisions will be deemed
reformed to the maximum less restrictive limitations permitted by applicable law and the parties
hereby expressly acknowledge their desire that in such event such action be taken. Notwithstanding
the foregoing, Ulta and I further agree that if any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions shall remain in full force and effect and in no way shall be affected,
impaired or invalidated.
16. Descriptive Headings. Descriptive headings contained herein are for reference only and in
no way define, limit, extend or describe the scope of this Agreement or any provisions thereof.
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